(Source: Business Wire)
Conexant Systems, Inc. (NASDAQ: CNXT) today announced that it has completed the sale of its Broadband Access product lines to Ikanos Communications, Inc. (NASDAQ: IKAN) for $54 million. The company received approximately $47 million in cash at closing. The remaining proceeds are subject to an escrow to be released in one year. Conexant's Broadband Access business provided solutions for ADSL, VDSL, SHDSL, and PON applications. The company expects to record a gain on the sale of its Broadband Access product lines of approximately $35 million in the current quarter.
Conexant also announced that it plans to retire $80 million aggregate principal amount of floating rate senior secured notes due in November 2010.
The Continuing Conexant
"With the sale of our Broadband Access business completed, we have concluded the major restructuring of our business operations," said Scott Mercer, Conexant's chairman and chief executive officer. "The continuing Conexant, which we expect to be a stronger, more focused, more profitable company, is now concentrating exclusively on providing solutions for imaging, audio, video, and various embedded-modem applications. In each of these segments, we have established leadership positions.
"Moving forward, we plan to expand these positions by applying our core expertise in analog and mixed-signal design, firmware and software development, and our extensive applications knowledge to deliver solutions that enhance the success of our customers worldwide," Mercer said. "We also plan to capitalize on new growth opportunities in adjacent markets that leverage our core capabilities.
"Over the past several years, we have focused our product-development and acquisitions efforts on our imaging and audio product lines," Mercer said. "In our most recently concluded quarter, these key product lines delivered year-over-year growth of 12 percent and sequential growth of 30 percent, and accounted for more than 50 percent of total revenues for our continuing company."
Senior Secured Notes Retirement
Conexant plans to continue improving its capital structure through the early retirement of up to $80 million of its floating rate senior secured notes due in November 2010. The company is commencing a tender offer for $73 million of the notes and intends to purchase an additional $7 million of the notes. If the company decreases the outstanding notes by $80 million, it estimates that interest payments will be reduced by more than $5 million per year.
